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One of the common reasons given for business failure is the absence of a workable marketing plan. You might wonder how can that be in 2013 with all the books, software, and free information on the Internet about creating marketing plans? Good question. Whatever the reasons too many companies don't have the right plans to take them where they want to go. This post is my attempt to give readers the big issues they need to consider to create an effective plan.

What are the two main purposes of a marketing plan?

The two main purposes of a marketing plan are (1) a blueprint for company personnel to follow and (2) a selling document to sell the following constituents:

Key personnel to come work for the company

Bankers to loan the company money at a lower interest rate

Investors to give the company more money for each share of stock

Employees to be motivated and convinced that they are working for the right company.

What are the main elements in a marketing plan?

Marketing plans have two main elements – (1) Goals and (2) Strategies to achieve them. What kind of goals? The goals need to be measurable and challenging. Measurable goals give everyone in the company a common target. If the goal is to sell $1 million this month, it is easy to measure progress toward that goal during the month and to figure out if it is achieved at the end of the month. Challenging goals keep everyone interested, help to avoid boredom, and motivate people to reach their potential. If too easy, goals will bore and de-motivate people. If too difficult, goals will frustrate and disappoint employees that find it nearly impossible to achieve them.

The right mix of strategies using the 7 building blocks of marketing

Once measurable goals are determined, the next step is to create marketing strategies to achieve them. Marketing strategies are devised from a marketer’s periodic table of elements that I call the 7 building blocks.

Marketing Information System

It all starts with a system to collect, analyze, report (to the decision makers), and take action on marketplace information in real-time.

Market Research. In the “old days,” market research was sufficient. Marketers could look backward to determine where and how they should go forward. Actually, looking backward is never sufficient, but it is far better than doing no research at all. To implement a great Marketing Information System, market research has to be an important component since you need to look backwards to understand the successes and mistakes of the past. In fact, in the scouts and the military, they teach you to triangulate your position so you don’t get lost. You pick three points approximately 120 degrees apart to fix your position. Two of them are often behind and one is ahead.

Branding (Corporate Image and/or Positioning)

Once the proper information is collected, branding strategies are crafted to produce images of the company and its products that (1) encourage prospects to buy and (2) differentiate them from competitors. To get non-experts to understand what branding is, I break it into two components that I call the “lock” and “key.” Once the lock and key are fashioned, branding tools are developed to help communicate them.

Lock. The “lock” represents the target audience that has a need for the products from the company it trusts to do a better job of fulfilling this need.

Key. The “key” involves creating images of the company and each of its products that fit the lock better than competitors.

Products are developed to fit your brand map. It is critically important to make the product so that it meets or exceeds expectations. If the product does not deliver on the promise of the branding images that were created, buyers will be disappointed, and they will share their disappointment with their referral pyramids. If on social networks, these referral pyramids could grow to enormous proportions and destroy brands and companies. The two most common product design strategies are shown below:

Standard product model. Everyone who buys the product starts with the same basic platform. They can customize their configuration by adding options and accessories. The original IBM PC and Ford automobile followed this model. According to Henry Ford, buyers could have any car as long as it was black.

Diversified product model. Differentiation is built into each product configuration. A good example of this is the original General Motors product line devised by Alfred P. Sloan where buyers had both model and color choices – Chevrolet (low end), Buick, Pontiac, and Oldsmobile (mid-market), and Cadillac (high end).

Price

Once the product is defined, cost of sales can be determined, and pricing strategies can then be devised. The more uniqueness, quality, and desirability created by the branding and product strategies, the higher the price that can be charged. There are many different pricing strategies. I have outlined three of the top pricing strategies that are commonly employed.

What the marketing will bear. This is a pricing strategy that works for highly-unique and desirable quality products.

Gross Margin. This strategy takes cost of sales and derives a price that produces a target gross-profit margin.

Most Significant Digit. This strategy recognizes that the buyer’s brain typically focuses on the most significant (or leftmost digit). For example, to the buyer brain $9.99 or $9.95 seems a lot less expensive than $10.00 even though it is only a penny or a nickel less.

In some cases, these three strategies are combined. For example, Apple typically sells high-end differentiated products at higher prices that satisfy their gross profit margin targets and use most significant digit pricing. If you visit the Apple store, you will see iPads listed from $499.

Distribution

Distribution is the convenience function. Buyers buy from sellers that make it easier for them to find, buy and use the products that they sell. In the US, there are two common direct channels.

Manufacturer sells to a big box store or a franchisee who turns around and sells the product to the end buyer. Example: Wal-Mart or Target.

Manufacturer sells to a distributor, or wholesaler, who turns around and sells the product to a dealer, or retailer, who then sells it to the end buyer. Example: Any local or small to mid-sized retailer.

Unsophisticated businesses presume that they can cut out the middle people and save money. While this can be true, those businesses don't know that they have to perform (or pay for others to perform) the functions of the middle people that they cut out – the warehousing that the big box store or wholesaler provides and the convenience that the retailer provides. Also, these middle people have locations, sales people, and marketing efforts that are also lost when they are eliminated, and they may reach retailers and end buyers that you cannot.

Promotion

The number of promotion strategies is so large that it would take a book to cover them all. The top strategies in the US fall into four categories…

Personal selling. A salesperson, or seller, sells to the buyer face to face.

Advertising. The seller puts ads in mass communication media with the goal of producing buying actions that lead to sales.

Sales promotion. A discount, coupon, rebate or other incentive is offered to the buyer (or reseller) to encourage them to buy or sell quicker – usually by an expiration date.

Once integrated marketing strategies that use the 7 building blocks (as ingredients) are crafted, (1) budgets to execute these strategies and (2) sales forecasts that sum to the measurable goal in the marketing plan are developed. As the plan is executed, actual costs are measured against the budget and actual sales are compared with the forecast. Any significant deviations from performance targets and budgets trigger an analysis to determine why. This should be followed by the appropriate corrective action. If developed and implemented properly, the plan will have a high probability of success. If properly built and utilized, the marketing information system will produce continuous improvements and a competitive advantage. As Toyota's Katsuke Watanabe said in a Harvard Business Review article, “There is no genius in our company. We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution.” Best of luck in creating a marketing plan that leads to a revolution of greater success for your organization.